Moody's says Home prices will fall 20% soon

[Anonymous]

The housing market just slid into a full-blown correction, says top economist Mark Zandi. These 183 housing markets could soon see home prices fall 20%, Moody’s says

https://fortune.com/2022/08/24/housing-market-falling-home-prices-2023-downgraded-forecast-moodys-analytics/

Change of buying plan. Waiting for correction to materialize.

[Anonymous]

Keep dreaming....

[Anonymous]

Anonymous wrote:Keep dreaming....

Ha Ha.. why are you getting annoyed? Are you mad at Moody's Analytics? for telling us the truth through their data driven market approach?

[Anonymous]

Somewhere sure. Here, prob not. Not like they're building more close in.

[Anonymous]

Anonymous wrote:Somewhere sure. Here, prob not. Not like they're building more close in.

We are not very particular to live inside the beltway. We are fine 30 miles outside the beltway. Builders are calling us almost every two days to come visit and cut the deal. We will wait for now

[Anonymous]

People have been waiting for almost 15 years for that big downturn.

[Anonymous]

No doubt things have cooled in my DC neighborhood. But 6 months ago there were some truly ridiculous sales. I guess the buyers borrowed cheaply (i.e., low APRs) but will need to sit tight for at least a couple years to consider reselling. The problem is that even with somewhat less expensive prices our mortgage would be as much or more, so we're adding to the stagnation and staying still.

[Anonymous]

I can't read the full article because of the paywall, but according to the map accompanying the article, the DC metro is not one of those markets.

Mark Zandi has a good reputation, although I'm inherently a little bit skeptical of forecasting models like this; they're calibrated on historical data so they perform well in typical conditions, but they often don't perform well when fundamental factors (e.g. inflation or interest rates) go outside of typical bounds. These models aren't usually very well micro-founded, which would be necessary for them to work well in extreme conditions. Of course, even if they were, it's hard to build and calibrate a good model of a situation that hasn't yet arisen.

Question for those who can read the article: does the Moody's model specify whether it's forecasting nominal or real prices? If it's forecasting real prices, then keep in mind that because of high inflation, real prices may fall quite a bit in the next year without nominal prices falling at all.

[Anonymous]

Anonymous wrote:People have been waiting for almost 15 years for that big downturn.

Not quiet. Housing bottomed in 2012-2013

[Anonymous]

Anonymous wrote:I can't read the full article because of the paywall, but according to the map accompanying the article, the DC metro is not one of those markets.

Mark Zandi has a good reputation, although I'm inherently a little bit skeptical of forecasting models like this; they're calibrated on historical data so they perform well in typical conditions, but they often don't perform well when fundamental factors (e.g. inflation or interest rates) go outside of typical bounds. These models aren't usually very well micro-founded, which would be necessary for them to work well in extreme conditions. Of course, even if they were, it's hard to build and calibrate a good model of a situation that hasn't yet arisen.

Question for those who can read the article: does the Moody's model specify whether it's forecasting nominal or real prices? If it's forecasting real prices, then keep in mind that because of high inflation, real prices may fall quite a bit in the next year without nominal prices falling at all.

Good point. The article talks about nominal prices (inflation adjusted) but the expectation is that Fed's aggressive move will bring down inflation close to target level. Winter is approaching and there is tremendous pressure to lift the sanctions on energy producers. Consequence is on Europe's ability to heat during winter. So things are expected to normalize for energy as well. Home prices are the largest contributors to inflation so Fed move will significantly influence the home prices.

[Anonymous]

I think the desirable areas already dropped 10-20% from the peak May-June 2022 prices.

I know Vienna well and I would say it fairly valued.
I know Arlington well and I would say the 1940 colonials selling 900k may come down another 10%

[Anonymous]

Anonymous wrote:I think the desirable areas already dropped 10-20% from the peak May-June 2022 prices.

I know Vienna well and I would say it fairly valued.
I know Arlington well and I would say the 1940 colonials selling 900k may come down another 10%

$2m new construction in Vienna isn’t fairly valued, LOL.

[Anonymous]

I believe it. Prices aren’t sustainable with 6% interest rates.

[Anonymous]

Twenty percent? In this area?

Regardless of “real value” I don’t think investors who can pay cash, homebuyers who don’t need large mortgages, or even regular old 20% down homebuyers would wait until prices around the DMV dropped 20 percent before purchasing real estate. I think that if prices dropped 10%, tops, they will assume it’s being sold at a discount if you’re thinking long-term.

[Anonymous]

Anonymous wrote:People have been waiting for almost 15 years for that big downturn.

not really. the past 2 years prices have gone up 40%. I think the ones waiting for a downturn are in the past 2 years.